Paypal will be automatically submitting statements to the IRS, so it is your responsibility to declare the income at the end of the year. I also heard that they will be submitting statements over $5k or more... not sure if you need to declare anything under $20k... yet... But i wonder how much Paypal submits as revenue for the millions they make in interest off of everyone's cash that in their account and the money they have on hold for transactions.

yea i got hit with the paypal tax return last year. Included my website sales and ebay sales...pretty nuts to see it for the first time since using Paypal in 2000.

I have a question about this if any one can help,

if I switch payments to my partners's paypal account before I hit the 20,000 mark. will i still get taxed? or will I have to creat a new ebay account for him altogether to avoid the tax? as in, is ebay the one reporting on its sales or more of paypal is the one reporting?

eBay and paypal are the same company (or more accurately, Paypal is owned by eBay). Some segments of their businesses are separate, but on this I think they're working together.

I think the "issue" for you might be that if you're married, the two will be combined on your tax return(s). If you're really considering this, I'd search out an accountant who might know the "real" answer for you...

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